Asia
Vinyl chloride monomer (VCM) prices rose between 2 November 2012 and 1 February 2013, reflecting an increase from an average of $800/tonne CFR (cost &freight) NE (northeast) Asia to $900/tonne CFR NE Asia on the back of a critically short supply of VCM within Asia.
Supply of VCM decreased significantly following the decommissioning of major Malaysian producer PETRONAS Chemicals Group (PCG)’s Kertih-based 400,000 tonne/year VCM unit from 1 January 2013, leading to increased demand for VCM from downstream polyvinyl chloride (PVC) makers.
The southeast Asian region was more significantly impacted in terms of prices and spot availability, with spot prices rising from an average of $840/tonne CFR SE (southeast) Asia to $975/tonne CFR SE Asia between 2 November 2012 and 1 February 2013.
With downstream PVC showing positive margins and healthy demand, most participants expect VCM prices to remain stable-to-firm for the near future.
Updated to mid-February 2013
Europe
Declining demand and static prices for vinyl chloride monomer (VCM) during most of 2012 has continued into 2013.
There has been poor offtake from the downstream polyvinyl chloride (PVC) market, whose consumption is influenced by the construction and automotive industries. Falling output in these two sectors has led to declining VCM and PVC sales.
To balance a long market, PVC producers have reduced output, which has resulted in lower VCM demand.
Despite improved weather in April and May 2013, PVC demand has not seen a major seasonal improvement because the poor economic situation continues.
Oversupply in the PVC sector has been emphasised by news that Switzerland-headquartered INEOS and Belgium-based Solvay plan to combine their chlorvinyls businesses into a joint venture.
France-based producer KEM ONE’s upstream vinyls business is in receivership, and Spain-based producer Ercros is planning to restructure.
Updated to mid-May 2013
US
Spot prices for US vinyl chloride monomer (VCM) remained flat through November, as market participants took a wait-and-see approach to see what happened with polyvinyl chloride (PVC), the end-product for VCM.
Demand for PVC steadily improved, especially from the home construction sector, where it is used in the manufacture of piping, siding and other building products.
The increased demand, coupled with rising prices for primary feedstock ethylene caused by planned and unplanned outages, began to put upward pressure on VCM pricing in December. Later that month, major producer PPG Industries (now a part of Axiall) declared a force majeure on VCM and caustic soda, another chlor-alkali product, after a fire at its facility in Lake Charles, Louisiana.
PPG’s declaration of force majeure sent ripples through the US Gulf chlor-alkali industry, as Mexico-based producer Mexichem declared its own force majeure on PVC because it could not obtain VCM from its principal supplier. VCM spot prices rose somewhat in response, but market participants said that the impact on the overall market was relatively minimal.
With many expecting a sustained rebound in 2013 for the US homebuilding industry, a key market for PVC, the outlook calls for increased demand for VCM.
Updated to mid-February 2013